the Economics of Apple


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Before Steve Jobs retook the reins at Apple Computer in 1997, many in the industry had begun to sound the death knell for the innovative but beleaguered company. But in a stunning turnaround, Apple pulled itself out of a pool of red ink and began booking positive earnings. Now, despite shrinking market share -- about 4 percent compared with Windows' 95 percent -- Apple is holding its own and making money.

One key reason for the company's success is its ability to sell both software and hardware at reasonable margins -- a goal that has eluded many PC makers, which have found their hardware products commoditized. In fact, hardware is "still Apple's bread and butter," Roger Kay, director of client computing at IDC, told the E-Commerce Times.

read the full article here:

http://www.ecommercetimes.com/perl/story/19485.html

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In other words, Apple have such large profit margins on each item they sell that they afford to stay in business despite a pathetic market share.

Of course this is all thanks to the loyal customers that buy their products. These are, of course, the same loyal customers that have to now pay extra for the iTools that they though was part of their OS.

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